Hot on the heels of Sir David Attenborough’s surprise appearance at the Glastonbury festival and right in the middle of London Climate Action Week, the UK government has published its Green Finance Strategy. While it’s a weighty tome and takes somewhat more effort than listening to the popular naturalist it contains a lot of encouraging ideas and targets.
The main thrust of the report is to encourage the financial sector to take an increased role in enabling the UK to protect the environment and reach its target of net zero greenhouse gas emissions by 2050. To do so, the government wants to ensure that climate and environmental factors are integrated into mainstream financial decision making across all sectors and asset classes.
Of course, many other countries and non-governmental bodies are also doing similar work, some of which we analysed in this recent report. A cornerstone of the strategy, and ESG investment more broadly, is knowing how any given company is adapting to or seeking to impact climate change. Some of the most advanced work in this area comes from the Task Force on Climate-related Financial Disclosures (TCFD) and its positive that an expectation is being placed on listed companies to disclose in line with TCFD recommendations by 2022.
This “expectation” could be made mandatory after a new Taskforce has examined the most effective ways to approach disclosure more broadly. Its brief includes taking forward discussions with international standard setters to promote internationally consistent standardisation.
Green Finance Course
Also from an international perspective, the UK strategy commits to at least match the ambition of the Sustainable Finance Action Plan that the European Commission is in the process of implementing, regardless of the outcome of Brexit.
Perhaps indicative of the amount of policy-setting required in the coming years, the strategy also includes the interesting step of creating, with Oxford University, a short course for government officials to provide foundational knowledge on green finance. More broadly, a Green Finance Education Charter is launched to help build green financing skills across banking, financial and professional service skills.
Practical examples of linking financial services to green standards include plans upgrading homes to Energy Performance Certificate (EPC) Band C by 2035 and supporting lenders in evaluating the EPC performance of their portfolio of loans. £5 million of funding will be made available to the private sector to pilot new products such as green mortgages. Up to £200 million, which will be matched by private investors, will be made available to expedite the rollout of charging infrastructure.
To better understand the publics views on ethical, responsible and impactful investment practices the government is running a survey of 6,000 people on their values, awareness, interest and barriers to action.
